An Overview Of

Presented by Sulaimah Mahmood, IE Singapore

ASEAN FREE TRADE

AREA
(AFTA)
From mere geo-political security concerns to economic
security to economic expansion

ASEAN : A Regional Economic Space

4476 sq km
Area
502 million
Population
US$737
GNP billion
Per Capita GDP US$1164
Range in PCGNP US$260-$30,170
Total Trade US$650 billion
Objective of ASEAN is to increase the region’s competitive edge
as a production base geared for the world market
AFTA : Initiatives for Economic Integration
 Common Effective Preferential Tariff (CEPT) Scheme for AFTA

 ASEAN Framework Agreement on Services (AFAS)

 E-ASEAN Agreement

 ASEAN Investment Area (AIA)

 ASEAN Industrial Cooperation (AICO)

 Initiative of ASEAN Integration (IAI)

 ASEAN Integration System of Preferences (AISP)

 AFTA

COMMON EFFECTIVE
PREFERENTIAL TARIFF
(CEPT) SCHEME
 Common Effective Preferential
Tariff (CEPT)
Scheme for AFTA

• Overview & Objectives

• Criteria

• Benefits
 • Implementation Status & Impact

• Business Models

CEPT Scheme - Overview

 Launched 1993

 Reduction of high tariffs - 0-5% tariff rates for ASEAN-6

by 2003
(V -2006, LM -2008 & C – 2010)
  Abolition of Quantitative restrictions & Non-tariff barriers

 Cover all products (classified under 4 categories)

 Elimination of all import duties by 2010 for ASEAN-6

and 2015 with flexibility for CLMV

CEPT Scheme - Objectives

• Increase intra-ASEAN trade

• Increase region’s competitive edge

• Attract more foreign direct

investment
CEPT Product Coverage
 CEPT PRODUCT LIST
Covers manufactured & agricultural products

67,231 tariff lines

Inclusion List Temporary Exclusion List General Exception List

phased in by 2000
• 0-5% tariff by ASEAN-6  permanently excluded
• QRs eliminated Highly Sensitive & due to national security,
immediately Sensitive Lists public morals, health e.g.
unprocessed agriculture arms, ammunition,
• NTBs abolished narcotics etc
products e.g. rice,
within 5 years
sugar, garlic, meat etc
60,487 tariff lines 687 tariff lines
Criteria for CEPT Scheme

1. Product must be included in Inclusion

List of both exporting and importing
ASEAN countries
Rules of
Origin
2. 40% Single Country or Cumulative Rule of
Origin
 (Materials Cost + Direct Labour Cost + 40% Direct
Overheads + Profit)
Country = X 100%
Content FOB Price
Certificate of Origin
 1. Goods consigned from (exporter’s business name, address, country) Reference No.

ASEAN COMMON EFFECTIVE PREFERENTIAL

TARIFF SCHEME
(Combined Declaration and Certificate)
2. Goods consigned to (consignee’s name, address, country) FORM D
3. Product must Issued in Singapore

have Certificate
See notes overlea
f 3. Means of transport and route (as far as known) 4. For official use

Preferential Treatment Given Under ASEAN Common

Departure Date Effective Preferential Tariff Scheme

“Form D” Vessel’s Name/Aircraft etc.

Preferential Treatment Not Given
(Please state reason/s)

Port of Discharge
Signature of Authorised Signatory of the Importing
Country
5. Item 6. Marks and 7. Number and kind of packages; description of goods 8. Origin 9. Gross weight 10. Number and
number numbers of (Including quantity where appropriate and HS criterion or other date of
packages number of the importing country) (see notes quantity invoices
overleaf)

11. Declaration by the exporter 11. Certification nts It is hereby certified, on the basis of control
The undersigned hereby declares that the above details and carried out, that the declaration by the exporter is correct.
stateme are correct; that all the goods were produced in
........................................................................................
(country) se
and that they comply with the origin requirements specified for tho
goods in the ASEAN Common Effective Preferential Tariff Scheme
for goods exported to

................................................................................................
(importing country) ..........................................................................................................................
.................................................................................................. Place and date, signature and stamp of certifying authority
.Place and date, signature of authorized signatory
Savings?

Example:

BENEFITS - What are the Tariff

Export of Thinners to Malaysia - HS 3814.00.200
CIF Value: S$1,000

MFN Rate: 15%

CEPT Rate: 5%

With Form D: S$50

 Without Form D: S$150

Savings: S$100

Implementation Status
Realization of AFTA for ASEAN-6
On 1 Jan 2003
¨ Total No of Tariff Lines = 44,900
 =
¨
Inclusion List = 44,361 (98.8%)
¨

, .
No. of Tariff Lines at 0-5% = 44,160 (99.6%)

¨
Others (Tariff >5%) = 201 (0.4%)
¨

Average Tariff Rate = 2.38%

Realization of AFTA for CLMV
On 1 Jan 2003
Total No of Tariff Lines = 22,331

Inclusion List = 16,126 (72.2%)

No. of Tariff Lines at 0-5% = 8,977 (55.6%)

Others (Tariff >5%) = 7,149 (4.43%)

 Average Tariff Rate = 6.08%
Individual Countries Breakdown
Number of Tariff Lines in the Tentative 2003 CEPT Package

Number of tariff Lines Percentage

IL TEL GEL SL/HSL Total IL TEL GEL SL Total
Country

Brunei D. 6,337 - 155 - 6,492 97.61 - 2.39 - 100

Indonesia 7,206 - 68 11 7,285 98.92 - 0.93 0.15 100

Malaysia 10,116 218 53 8 10,395 97.32 2.1 0.51 0.08 100

Philippines 5,632 - 16 10 5,658 99.54 - 0.28 0.18 100

Singapore 5,859 - - - 5,859 100 - - - 100
 Thailand 9,211 - - - 9,211 100 - - - 100

ASEAN-6 44,361 218 292 29 44,900 98.80 0.49 0.65 0.06 100

Cambodia 3,115 3,523 134 50 6,822 45.66 51.64 1.96 0.73 100

Lao PDR 2,533 856 74 88 3,551 71.33 24.11 2.08 2.48 100

Myanmar 4,182 1,224 48 18 5,472 76.43 22.37 0.88 0.33 100

Viet Nam 6,296 - 139 51 6,486 97.07 - 2.14 0.79 100

CLMV 16,126 5,603 395 207 22,331 72.21 25.09 1.77 0.93 100

Total ASEAN 60,487 5,821 687 236 67,231 89.97 8.66 1.02 0.35 100
Data as of 28 February 2003

Individual Countries Breakdown

Number of Tariff Lines at 0-5% in the Tentative 2003 CEPT Package
 Number of Tariff Lines Percentage

0-5% >5% Other 1 Total 0-5% >5% Other Total

Country

Brunei D. 6,285 28 2 24 6,337 99.18 0.44 0.38 100

Indonesia 7,206 - - 7,206 100 - - 100

Malaysia 10,041 - 75 10,116 99.26 - 0.74 100

Philippines 5,565 23 3 44 5,632 98.81 0.41 0.78 100

Singapore 5,859 - - 5,859 100 - - 100

Thailand 9,204 - 7 9,211 99.92 - 0.08 100

ASEAN-6 44,160 51 150 44,361 99.55 0.11 0.34 100

Cambodia 238 2,877 - 3,115 7.64 92.36 - 100

 Lao PDR 1,357 1,176 - 2,533 53.57 46.43 - 100

Myanmar 3,262 920 - 4,182 78.00 22.00 - 100

Viet Nam 4,120 1,439 737 6,296 65.44 22.86 11.71 100

CLMV 8,977 6,412 737 16,126 55.67 39.76 4.57 100

Total ASEAN 53,148 6,463 887 60,487 87.85 10.68 1.47 100
Data as of 28 February 2003

Average CEPT Rates

ASEAN 6 New
Members
199312.76%
 20013.22% 2001 7.17%
20022.93% 2002 6.67%
20032.38%
6.08%
2003 4.08%
2006 3.31%
2008
2010 4.62%

Elimination of Tariffs
 60% of all ASEAN-6 tariff lines at 0% by 2003
 Currently, 48.8% (21,626 tariff lines) at 0%
Number of Tariff Lines at 0% by 2003 for ASEAN-6
(Based on the Tentative 2003 IL)
Number of Tariff Lines Percentage

Country 0% > 0% Total 0% >0% Total

Brunei D. 5,110 1,233 6,337 80.64 19.46 100

Indonesia 3,938 3,268 7,206 54.65 45.35 100

Malaysia 6,100 4,016 10,116 60.30 39.70 100

Philippines 215 5,417 5,632 3.82 96.18 100

Singapore 5,859 0 5,859 100.00 0.00 100

Thailand 404 8,807 9,211 4.39 95.61 100

Total ASEAN-6 21,626 22,741 44,361 48.75 51.26 100

 Data as of 28 February 2003

Impact of CEPT Scheme

 Increased intra-ASEAN
exports from US$44 bn in
1993 to US$83 bn in 2001
 Average trade growth was
8.26% p.a.

 Average tariffs tariff rate for

ASEAN-6 dropped to 2.38%
100
90
80
70
60
50
40
30
20
10
0
1993 1994 1995 1996 1997 1998 1999 2000 2001
14
12 ASEAN 6
10 New Member
8
6
4
2
0
1993 2001 2002 2003 2006 2008 2010
Basic Information
 Identify the Harmonized System (HS) Code of the
product for exports
 Determine the country of export interest
 Visit ASEAN Secretariat website to check the tariff
rates for the product
 Compare MFN and CEPT rates
 Apply for Registration
Relevant Websites

ASEAN CEPT Tariff Reduction Schedule available for download:

http://www.aseansec.org//12025.htm
(Consolidated CEPT Package and Legal Enactments)

Application for Factory Registration:

http://www.tradenet.gov.sg/trdnet/index.jsp?catName=9&artName=
10&url=/html/3_Certificate_of_Origin_Procedures.html

Manufacturing Cost Statement for CEPT:

http://www.tradenet.gov.sg/trdnet/index.jsp?catName=9&artName
=10&url=/html/7_List_of_Annexes.html
 Business Models
Normal Form D & Direct Shipment
 ASEAN ASEAN
Manufacturer Importer
e.g. Singapore e.g. Thailand

Back-to-Back Form D
Thank you